Two growth stocks for ambitious investors

If you have ambitious plans for your portfolio, it?s worth looking at fast-growing stocks that can match these ambitions. With that in mind, here?s a look at two companies that I believe have strong growth potential going forward.
Volution Group
Ventilation may not be the sexiest industry on the planet, but that doesn?t mean the industry isn?t capable of generating investment opportunities. Volution Group (LSE: FAN) is a UK-based supplier of ventilation products to the residential and commercial construction markets in the UK and Europe, and the £394m market cap company has bold plans to grow through a combination of organic…

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If you have ambitious plans for your portfolio, it’s worth looking at fast-growing stocks that can match these ambitions. With that in mind, here’s a look at two companies that I believe have strong growth potential going forward.

Volution Group

Ventilation may not be the sexiest industry on the planet, but that doesn’t mean the industry isn’t capable of generating investment opportunities. Volution Group(LSE: FAN) is a UK-based supplier of ventilation products to the residential and commercial construction markets in the UK and Europe, and the £394m market cap company has bold plans to grow through a combination of organic growth and selective acquisitions.

A glance at the income statement suggests that the company is doing all the right things, with revenue ticking up steadily over the last five years, from £88m in FY2011 to £155m in FY2016, a compound annual growth rate (CAGR) of a healthy 12%. And with analysts forecasting a top line of £182.5m this year, growth of an even higher 18% may be on the cards.

Interim results announced in March were impressive, with revenue growing 19.3% (boosted largely by acquisitions), adjusted operating profit increasing 7.7%, and adjusted basic and diluted EPS rising 7.4% to 6.5p (constant currency figures). The company stated that despite uncertainty in the UK following the Brexit result “we remain confident in delivering further good growth in 2017 in line with our strategy.“

Full-year earnings of 13.6p are forecast, meaning that at the current share price, the stock trades on a forward looking PE ratio of 14.4, which seems reasonable. A forward-looking dividend yield of 2.1% is also on offer. After falling heavily after the Brexit vote last June, Volution’s share price has rebounded strongly, however, I reckon there could be further to run, especially if the share price can clear its previous highs and break into blue-sky territory.

Trifast

Also offering strong potential is industrial fastenings specialist Trifast(LSE: TRI). The £267m market cap company designs, manufactures and distributes mechanical fasteners for a variety of industries and has impressive geographical diversification, with sales in the UK, Europe, the US and Asia.

The financials here look excellent, with revenue growing every year over the last five at a CAGR of 11% and operating margins surging from 4.8% five years ago to 9.6% for FY2017. Earnings have risen 70% in the last three years alone, and the company has built up a pile of cash, with cash of £25m on the books as of 31st March.

Preliminary FY2017 results released earlier this week saw group revenue up 7%, profit before tax up 15.4% and underlying diluted earnings per share up 12.9% (constant currency figures). Management sounded upbeat about the future, stating “the current financial year has started well and, with a robust pipeline in place, there is no indication this will change.”

Trifast currently trades on a forward-looking P/E of 17.8, so isn’t the cheapest small-cap around, however I believe the company’s impressive track record justifies the valuation. In my opinion, Trifast looks to be a high quality company and I reckon it could be one of those stocks that rewards shareholders handsomely over the long term.

Is this small-cap an even better opportunity?

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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